The taxman cometh

In 1862, the Civil War was raging and it had become clear that it would not be the quick and easy victory either the North or the South had predicted at its outset.

Men and materiel were being chewed up by the war machines on both sides of the Mason-Dixon line.

And one of the pressing questions in the United States Congress was how to pay for keeping the men and materiel on the move.

And, in 1862, Fred T. Frelinghuysen was a 42-year-old lawyer who lived in Newark, New Jersey, with his wife and five children.1 His law practice was located at 283 Market Street in Newark, New Jersey. And for the first time in his professional life, in 1862, he had to cough up $10 to an outfit called the Bureau of Internal Revenue.2

Because 151 years ago, today, Congress passed what became known simply as the Tax Act — a vehicle to raise funds to finance the war… and establishing what was then called the Bureau of Internal Revenue. The precursor to today’s Internal Revenue Service.3 The agency we all love to hate.

It wasn’t the first time Congress had passed a tax to finance the Civil War. It did so a year before in 1861.4 But efforts to enforce that law had gone essentially nowhere; even Treasury Secretary Salmon Chase had said it was unworkable because it didn’t have any enforcement mechanism. 5

Principally because of the lack of enforcement, the 1861 law didn’t raise the money needed. So along came the 1862 statute, which spanned 57 pages of text and 119 sections and had three essential parts:

• the first-ever graduated tax on income;
• an excise tax on many goods and services;
• and an enforcement mechanism headed by a Commissioner of Internal Revenue whose enforcers were known as the Bureau of Internal Revenue.6

Where else but in the records of the Bureau of Internal Revenue would we find out that, in 1862, E.A. Stevens of Castle Point, New Jersey, paid $49 in taxes on a $2000 yacht, a billiard table, and five horse carriages?7

Or that Allan Stevens of Owego, Tioga County, New York, had to pay a $5.85 tax bill on 1 November 1862 on 44 pairs of boots made and sold, valued at 195.05 total?8

Or that Edwin M. Robinson of East Orange, New Jersey, had $83,089.31 in income in 1862 on which he paid $4154.47 in income taxes?9 (And the mind simply boggles at that kind of income in 1862. One website I looked at said that would be about $1,930,232.56 in 2013 dollars.10)

And, of course, once having begun to tax the citizens, governments are loathe to stop taxing. And the checkered past of the income tax notwithstanding, the Bureau of Internal Revenue and its successor the IRS have continued to collect taxes — and create records — ever since:

Internal taxes for nonrevenue purposes were imposed on oleomargarine, 1886; opium, 1890; beet sugar, 1893; and white phosphorus matches, 1912. An income tax included in the Wilson Tariff Act (28 Stat. 570), August 27, 1894, was declared unconstitutional by the U.S. Supreme Court, May 20, 1895. Wartime taxes, levied during the Spanish-American War by an act of June 13, 1898 (30 Stat. 448), were substantially repealed by an act of March 2, 1901 (31 Stat. 938). The 16th amendment to the Constitution, effective February 25, 1913, authorized a federal income tax, which was imposed by an act of October 13, 1913 (38 Stat. 166).11

Check it out… and remember that the Civil War taxes were collected even after the War, and even in the southern states.

Yep, we may not like taxes. But boy do we like records. And tax records are among the very best there are.

“An Act to provide Internal Revenue to support the Government and to pay Interest on the Public Debt,” 12 Stat. 432 (1 July 1862); digital images, “A Century of Lawmaking for a New Nation: U.S. Congressional Documents and Debates, 1774-1875,” Library of Congress, American Memory (http://memory.loc.gov/ammem/index.html : accessed 30 Jun 2013). ↩

Ibid., “An Act to provide increased Revenue from Imports, to pay Interest on the Public Debt, and for other Purposes,” 12 Stat. 292 (5 Aug 1861). ↩

9 Comments

This post caught my eye because I had a post that mentioned this day back on April 19th. You might be interested to have a look at the link provided here because I posted a photo of the the May 1, 1864 – May 1, 1865 “United States Internal Revenue License” issued to my 2X great grandfather, Mason Freemen. It shows that Mason paid his “Ten Dollars” to “carry on the business or occupation of a Retail Dealer at Albion [Rhode Island].” Mason was the Proprietor of a general store in Albion. I have the original of the depicted license and it references the “Act to supply internal revenue to support the Government and pay interest on the public debt” approved “July 1, 1862, and the amendments and supplements thereto.”

Now the question is, did they get their money back when the Supreme Court declared that the Tax Act was unconstitutional? Hence the later amendment making income tax the reality it is today. What records exist in New Jersey for the return of the cash? Just askin.

The Civil War tax acts were never held unconstitutional. In fact, the general statutes were upheld in Springer v. United States, 102 U.S. 586 (1880). The 1895 decision that held the income tax unconsitutional (Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 429 (1895)) was limited to the 1894 statute. So there wouldn’t be any records of refunds based on alleged unconstitutional under the Civil War tax acts anywhere.

Thanks for your very useful post on tax records and how they can add interesting new facts to our family histories. I especially appreciate the time you took to add your well-documented sources. In addition to the tax records you cited, city and county property tax records are another good place to look when researching one’s family history. Some of the records are even available for free online and include photos of the assessed properties. There’s a post on my blog about Portland, Maine’s free online website that features 1924 tax photos of nearly every home in the city. Here’s a link to the Portland post.

I suppose that tax records are among the best there are because “real money” was on the line, and that’s when people start getting serious. I find it fascinating that taxes were first instituted to finance the Civil War. Having just read Rachel Maddow’s “Drift,” this link between taxes and war is newly alarming to me. (Let’s see . . . the only sure things are death and taxes. And war.) Very interesting post, again telling me something I didn’t know before!

Mariann, there were taxes before the Civil War, just not income taxes, because of the constitutional provision that “No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.”

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